The Three Questions
Every business asks three key questions:
• How much money came in?
• Where did the money go?
• How much money is left?
The answer to each question can come only from the practice known as accounting. Like other practices such as medicine and law, accounting has its own vocabulary. In many ways, accounting is the language of business.
Accounting can become quite complex. It has a high MEGO factor. MEGO stands for that state of mental saturation when “My Eyes Glaze Over” in stupefaction. An exasperated student was once overheard complaining, “Who ever thought addition and subtraction could be this hard?”
Accounting is one of our oldest skills. That started around 3500-3100 B.C. The earliest collections of understandable writing track how many bushels of grain came into the king’s warehouse. From the very beginning of commerce, counting stuff such as clay tablets made it possible. The tablets also told who had brought in the grain and how much the king had taken.
Hold the image of cash as water in your mind for another moment. It can easily evaporate. It can easily trickle away. You now begin to appreciate how important tracking of what happens to that cash can be. As a manager you assign resources: people, cash, materials, time. You need some way of knowing where your resources are, what they should be doing, and how well they’re doing it.
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